22 ELSS funds multiplied investors’ wealth by almost two times in three years

Tax saving mutual funds or ELSSs (short for equity linked saving schemes) help investors to save taxes under Section 80 C. Most investors focus on this aspect while investing in these schemes. Sure, many of them also believe they can offer superior returns over a long period of time. However, many investors don’t realise how much wealth they can create through investing in ELSS funds. Consider this: 22 ELSS mutual fund schemes multiplied investors’ wealth by almost two times in a three-year horizon. In simple terms, if an investor invested Rs 1 lakh in an ELSS fund three years ago, the investment would be worth around Rs 2 lakh now. Surprised?

Quant Tax Plan, the topper in the category, managed to multiply investors’ wealth by 2.31 times with a CAGR of 32.26%. In simpler words, if someone invested Rs 1.5 lakh in this scheme on August 24, 2020, the investment would have grown to Rs 3.46 lakh in three years. Bandhan Tax Advantage(ELSS) Fund multiplied investors’ wealth by 2.16 times. The schemes offered a CAGR of 29.38%.

Mirae Asset Tax Saver Fund, the second largest scheme in the ELSS category based on assets managed, multiplied investors wealth by 1.86 times. The scheme manages assets of Rs 17,418.71 crore. SBI Long Term Equity Fund, the oldest scheme in the category, offered a CAGR of 25.26%. An investment of Rs 1.5 lakh in the scheme would have multiplied by 1.96 times to Rs 2.94 lakh. The scheme has completed 30.42 years of existence.

Two ELSS schemes – HDFC TaxSaver, and Sundaram Tax Savings Fund- which have completed 27.42 years in the market, gave a CAGR of 25.04% and 22.88% respectively. HDFC TaxSaver, and Sundaram Tax Savings Fund multiplied investors’ wealth by 1.95 and 1.85 times respectively.

Parag Parikh Tax Saver Fund, which has been in the market for 4.09 years only, offered a CAGR of 22.88%. An investment of Rs 1.5 lakh in the scheme would have multiplied by 1.85 times to Rs 2.78 lakh.

We only considered regular and growth options. Around 36 ELSS schemes completed three years in the market. Out of 36 schemes, 22 schemes multiplied investors wealth by almost two times. We considered CAGR on lumpsum investment.

Tax saving or ELSS schemes are recommended to investors who are looking to save taxes under Section 80C of the income tax Act. Investors can invest a maximum of Rs 1.5 lakh in these schemes and claim tax deductions on it in a financial year. ELSS funds come with a lock-in period of three years.

Note, the above exercise is not a recommendation. The main purpose of this exercise was to find out how ELSS mutual fund schemes performed and whether they succeeded in multiplying investors’ wealth by almost two times in three years.

One should not make investment or redemption decisions based on the above exercise. If you are looking for recommendations, see: Best tax saving mutual funds or ELSS to invest in 2023